Jenny Marsden
Thursday, August 8, 2024
Gemma O'Connor
Thursday, February 5, 2026
Jump to section
Businesses share some common HR challenges across industries, from recruitment and regulations to compliance and culture. Those without an HR solution that enables the kind of scalability required to survive will sadly fall by the wayside.
Thankfully, there are ways to overcome them and that’s exactly what we’re going to do is guide you through the challenges and explain how HR growth tools are the solution as your business grows.
Let’s dive right into the biggest challenges at present:
Recruitment, onboarding and retention
People are at the center of every business, but hiring can be one of the biggest HR challenges faced by SMEs. Especially when considering the current job market.
At the end of November 2025, the unemployment rate was 5.1%, highlighting an increase year on year. While it may seem having more people to choose from would be a good thing, there’s far deeper reasons for this steady incline of unemployment. From:
Rising labour costs
Economic uncertainty
Hiring freezes
Cutbacks on entry level roles
Fears for the future
Businesses are concerned that with higher rates of SSP, NICs and the increases to the National Minimum Wage, they will not be able to cover the costs of hiring.
And when a company does hire, there’s the challenge of seamless onboarding and retention. It’s not unheard of for new staff to become disillusioned with a role if they start to see such cracks from the inside or feel it was mis-sold to them, so it’s crucial to get it right from day dot.
Acquiring and retaining the talent you need to grow becomes much easier with modern HR software that does the hard work for you. You can get smarter about recruitment with a central hub to manage it from beginning to end for you. From templated job descriptions to seamless onboarding journeys.
AI integration and ethical use in the workplace
In the last few years, AI has totally transformed the game. Offering new ways of working. However, the introduction of AI has been so fast; many businesses have been left in the dust. Stuck wondering if, how, and why they should integrate AI into the workplace.
AI tools are widely considered a security issue to businesses. Particularly those handling large amounts of sensitive employee and customer data. Taking the safest and most sensible approach to implementing AI in the workplace will be one of the biggest challenges faced by businesses.
Unsurpridingly our 2025 AI Pulse Report uncovered that 64% of businesses either have plans to bring in AI or have already started. This figure is up from 45% in 2024. However, the main concerns for business owners and managers are:
Legal compliance
Performance impact
Reputational damage
The best way to overcome many of these challenges is to plan. Writing a Ai policy for the workplace is the ideal solution for mitigating the risks, whilst educating and informing staff on appropriate use of AI in the workplace.
What’s more, training courses and your choice of AI tools can make all the difference. You may even opt to implement AI within your HR processes. Helping save time and reduce costs.
Employment law compliance and new regulations
A huge part of HR is keeping your business in line with employment law in the UK. It can be a bit of a minefield, especially when your workforce is getting bigger and bigger, and your contracts are getting more and more detailed.
Staying on top of staff training, including health and safety, takes constant monitoring to make sure everyone is up to speed.
As your business grows, managing workloads can be a challenge, considering the tough tasks of monitoring things like:
Even dismissals or tricky probation periods could come into play, and if you don’t comply with the law, you could face some hefty fines. So, getting the right HR advice on employment law for when your business grows can keep you on the right side of the law.
The Employment Rights Act 2025
Throughout 2026 and 2027, the new Employment Rights Act is being implemented. Bringing about some of the major employment law changes in a generation. Creating one of the biggest challenges for businesses and HR this year.
Over the next few months and years, your business will have to adjust a number of policies and procedures to comply with new employment laws.
Don’t panic, though! Our HR experts at BrightHR have created a handy guide, just for you! So, you can prepare your business for the latest updates.
Cultural alignment
You can also get help from HR software that grows with you on the culture front as an organisation—it can be of the easiest things to disintegrate as you bring in more staff, so it pays to keep on top of it with the right tools at your disposal.
Some HR solutions, like ours, includes access to exclusive online marketplaces with cost-saving perks and discounts for staff, that also doubles as a marketplace for you to boost your sales with unlimited adverstising. Others come with e-learning training courses for managers to cultivate a rewarding culture.
Plus, utilising HR tools such as a clock-in and out app can give your workforce the freedom to work remotely while still being able to check in and log their hours. This can be a great way to not only keep your existing staff happy, but also to attract new staff when you’re looking to fill vacancies for your growing business.
If you give your staff a reason to want to stay, you’ll be more likely to be rewarded with their loyalty.
Performance management
As your team grows, so does your responsibility to manage its performance—we’d say sorry, but you knew that already.
Regular reviews, promotions and contract negotiations are all part of your role at the people-focused center of the business. So, it is increasingly important to have a great solution to help you manage it.
Keeping on top of all the documentation that comes with tasks like these has arguably been a pain in the past, but you can now make use of unlimited HR document storage to help you along. The ability to access documents from anywhere and confirm key updates with alerts and read receipts means that performance management in HR has never been easier.
Employee training and development
Naturally, a growing workforce needs constant access to training and development opportunities to help your business stay ahead of the curve. It’s within your remit to put a solution in place to facilitate this, but it’s not a straightforward task, especially if you have multiple departments to keep in sync.
That’s exactly where an HR learning management system can come into play—help your staff with personal development opportunities and the capacity to meet all your needs as a fully compliant business, from HR to health and safety.
HR software solutions to overcome the challenges of HR
With BrightHR unlock an HR software solution that is designed to automate, streamline and simplify HR processes. Take advantage of a system built for growing businesses just like yours and overcome the many challenges faced within HR in today’s digital world.
Book your free demo today to get started.